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1、,John CookExecutive Director WJ Hopper&Co.LimitedChairman Thunderbird Private Equity Center Executive Advisory Board,Raising Venture Capital:An Entrepreneurial&GP/LP PerspectiveApril 2&4,2008,WJ Hopper International Harvester,Merrill Lynch,Security Pacific Bank,What are effective strategies and tact
2、ics to raise capital,both for entrepreneurs and fund managers?Vision,strategy,tactics and lessons learned,“Raising a new fund is an event of singular strategic importance for a private equity fund.The firms future is,in effect,placed into the hands of institutional investorswhose capital allocation
3、decisionsare a key influence in shaping the private equity industry.These investors will,by choosing whether or not to participate in the fund,either provide a mandate for continued growth or cast a collective vote of no confidence from which very few managers will ever recover.”,Importance of Fundr
4、aising,Source:“Fundamentals of Private Equity”-PEI 2008,Fundraising Ecosystem,Three Layer Cake,General Partners,Portfolio Companies,Endowments,Insurance,Limited Partners,Governments,Banks,Pension Funds,Foundations,Family Offices,Corporations,A,B,C,D,H,G,F,E,Fund of Funds,(USA/EUROPE/ASIA/LATAM/MIDEA
5、ST),Sovereign Wealth Funds,USA/EUROPE/ASIA/LATAM/MIDEAST,CARLYLE,GOLDMAN,NEA,CVC,Secondaries,Stakeholders,$500 MM Thunderbird Private Equity Partners,LPsUSA,LPs ASIA,LPs LATAM,E,D,C,B,A,Legal,Acct,GP=Cabrera Mgt LLC,Regulatory,CUSTOMERSSUPPLIERSEMPLOYEESLENDERS,EXITIPO TRADE SALE,Audit,Advisor,LPs E
6、urope,ENTREPRENEURS,Fundraising Process,Five Step ProcessTotal Time 12-24 Months,DD/Closing,Road-shows,Marketing,Pre-Marketing,Strategy Formulation,LPs with decision-making process move forward.Due Diligence documents sent to LPsLPs visit managers officeLPs agree to commitmentsCommunicate closings t
7、o remaining LPs,Contact potential LPs and distribute Fund marketing materialSend overview/teaser to initial targeted partiesSend PPM to requesting partiesSet up conference calls or face-to-face meetings for road-show periodComplete LP QuestionnairesInvite LPs to visit HQ,Understand and articulate ma
8、rket opportunityInitial formulation of fund strategy and tacticsInternal and external review and evaluation:resources,competition,market opportunity,teamGeneral agreement on fund strategy,terms,team,process and documentation,Preparation of documents/DD materialSelect key advisorsWork with advisors t
9、o create suite of documents.Map universe of LPs,decide on who to approach and when and by whomFinalize LPA,PPM,PPT,overview,diligence package,subscription agreements.Develop communications strategyForm new fund entity,On-site presentations and meetings with interested LPsVarious formats possible dep
10、ending on size of team and geography:Individual visits to LPs combined into a tourorLP group invited to luncheon or other event hosted by GP,Decision to Proceed,Identify and interview advisors,Retain Advisors,Form Team,Completed Marketing Docs,Prepare to go to market,Marketing strategy agreed,Road-s
11、how set up with LPs,Manage process and monitor feedback,Incorporate feedback from market,Begin to get signed subscription agreements,Monitor objections,make refinement in process,Face-to-face meetings with LPs,First,interim and final closings,Proceed with final closing process,Begin investment proce
12、ss,Documents,Marketing Package,OverviewFlip chart presentationPrivate Placement Memorandum,Due Dilligence Package,Subscription agreementSummary of all contractsActual contracts(only if requested)Names of advisors to the fundSample reports to investorsEstimated timelinesAsset allocations,Curricula vi
13、taeAttribution analysisInvestment transactionsManagement referencesPipeline of dealsArticles of incorporationRisk mitigation,Private Placement Memorandum,Executive Summary Investment Thesis and Rationale Investment Strategy,USPs and Value Add Sector and Geographic Focus Investment Process,Diligence
14、Process,Use of Debt,Exits Team Members and Advisory Board Track Record with Attribution Analysis Deal Sourcing and Pipeline Key Terms of the Fund Risk Factors and Conflicts of Interest Legal and Regulatory Matters Appendices,Standard Limited Partnership TermsObjective=Alignment of Interests,Fund nam
15、e:Thunderbird Private Equity Partners LPLegal structureDelaware Limited PartnershipManager:Cabrera Capital Management LLCFund size:$500 MillionMinimum:$5 MillionTerm:10 years+Two ExtensionsManagement fee:2%during investment period then decliningCarried interest:20%with 8%Hurdle RateGP contribution:2
16、%of Committed CapitalCo-investments:Yes for Large Commitments,Vision,Strategies and Tactics,To raise the right size fundWith the right teamWith the right strategyOn the right termsWith the right mix of LPs At reasonable time and cost,What is the Fundraising Vision?,Strategic Questions,Blanket The Ma
17、rket Or Be Selective?Geographic Target:Local,Regional,National,Global?Types of Target:Corporate Venture,Active Passive,Govt?Which Staff Should Undertake The Task?Documents Who,What,When,Where,How?Selecting Advisors:Legal,Accounting,Communications How Much Time and Money Will It Take?Use Placement Ag
18、ents Or Go It Alone?,What General Partners Need,HIGH QUALITY,VALUE-ADD INVESTORS Good Relationships with LPs Strong LPs with Patience,Understanding,Insights and Trust LPs with Sophisticated Approach to the Asset Class Low Turnover of LP Investment Managers Global Diversification of Investor Base Val
19、ue Added LP Base Advisory Board Members,Co-Investors No Interference in Running the Fund Little Friction Help with Exits,M&A Opportunities,Company Building Help with Secondary Market for LPs Who Need to Sell,What Limited Partners Want?,DIVERSIFICATION,HIGH RETURNS,LOW RISK Attractive Market Opportun
20、ity Over Long Time Horizon Broad and Deep Pipeline of Deals Systematic Approach High Quality Team with Cohesion,Credibility,Balance,Stability Prefer to Back Strong Teams No One-Man-Band Portfolio Diversification Across Sectors,Stages,Geography Special Terms:Co-Investments,Technology Window,M&A or IP
21、O Rights Stable Investment Environment:Regulatory,Economic,Fiscal Controlled and Manageable Risk Parameters Clear Value Creation Strategy of the Team Serial Relationship with GPs Clear Exit Routes via M&A,IPO,Strategic Sales Lower Fees Equitable Risk Sharing,Target Investors LP Decision Process,Insu
22、rance Companies=Institutional Model Commercial Banks=Institutional Model Investment Banks=Strategic/M&A/IPO Pension Funds=Institutional Model Corporate Investors=Strategic Drivers Foundations=Opportunistic/Strategic Endowments=Opportunistic/Strategic Fund of Funds=Institutional Model Governments=Str
23、ategic/Social Objectives Private Investors=Opportunistic/Personal,Sovereign Wealth Funds:$2.5 Trillion Problem,Abu Dhabi Investment Authority$875 billion Government Pension Fund of Norway$350 billion Government of Singapore GIC$330 billion Saudi Arabia$300 billion Kuwait Investment Authority$250 bil
24、lion China Investment Corporation$200 billion Singapore Temasek$159 billion Stabilization Fund of Russia$158 billion Canada Pension Plan$119 billion Australian Government Future Fund$61 billion Qatar Investment Authority$50 billion Alaska Permanent Fund$40 billion Libyan Investment Authority$40 bill
25、ion Brunei Investment Authority$30 billion Korea Investment Corporation$20 billion Malaysia Kazahana National$18 billion,Wrong Attitude,This is a Piece of Cake My Fund Was Made In Heaven Every LP Will Want My Fund Raise as Much Capital as Possible This Will Take No Time At All LPs Are Real Dummies T
26、arget All LPs Of All Types In All Categories Everywhere No Need For Personal Visits No Need For Professional Advisors,Right Attitude,My Fund Must Have Its“Issues”And Problems Only A Few LPs Will Be Interested In My Fund Better To Pace Myself,Do This In Stages Work My Network Personally This Will Tak
27、e 5 Times Longer Than I Planned This Will Cost 5 Times More Than I Planned LPs Are Pretty Experienced Folks Target Specific LPs Of Specific Types Be Prepared For Travel Good Advisers Add Value,Fundraising Trends,Big Picture,Explosion of Private Equity Globally Greater Acceptance of Asset Class by St
28、akeholders Larger Fund Sizes,Larger Institutional Allocations Top Firms Produce Best Returns-Persistence Growth of Secondary Market but at a price Greater Sophistication at GP and LP Levels More Transparency,Better Investor Relations Standardization of Terms&Conditions Greater Value Added Role of GP
29、 Better Governance and Regulatory Environment Better Risk Measurement and Control However-Much More Criticism of the Industry,Current Environment,Buyout boom of 2003-2007 has come to an end(or paused)Buyout firms paid too much for deals at the 2006-2007 peak Debt market closed for larger deals,more
30、equity to complete deals Recession is fully underway may be long recovery Dollar at all time low and dropping Mortgage market in turmoil with subprime mess Stock markets increasing volatility Financial sector Bear Stearns,UBS,Merrill Lynch,Northern Rock Sovereign Wealth Funds coming on stream big ti
31、me Fed and White House taking emergency steps to provide stability AND YET-private equity allocations are increasing!,Popular Sectors/Trends,Traditional:TMT,Life Sciences,Healthcare Mid-Market Buyouts/Expansion/Growth Specialized:Clean Tech Sector Energy:the hydrocarbon problem Infrastructure:electr
32、ic grid,telecoms,ports,transportation Emerging Markets:BRICS+N11 First Tier:India,China,Central&Eastern Europe Second Tier:Latin America,CIS,Middle East,Africa Increasing Interest in Venture&Growth versus Buyouts Globalization/Regionalization Opportunities,Predictions for 2008,Slow Down in Mega Buyo
33、uts(credit crunch/recession/falling markets)Pick Up in Late Stage Venture&Other Sectors(less leverage)Non-US Markets to Stay Strong(less mature,still growing)Secondaries&Distressed=Strong Growth,Tighter Pricing Sovereign Wealth Funds&Petro Dollars Make Bigger Splash Think Contrarian-Take Advantage o
34、f the Carnage Biggest Challenge:Build the Case for Value Add Greater Convergence of Asset Classes,Source:Dow Jones Private Equity Analyst“Review&Outlook”,Survey of Institutional Investors:2008,Source:Dow Jones Private Equity Analyst“Review&Outlook”,Plans to Increase/Decrease Allocations:78%plan to m
35、aintain or increase allocations to private equity 22%plan to reduce or terminate allocations to private equityAreas of Increasing Interest:Distressed debt,mezzanine,secondaries,co-investments,venture capital,growth equity,small and mid-market buyouts,cleantech,China,India,Russia,Western and Eastern
36、Europe,Latin AmericaBiggest Areas of Concern:Credit crunch,economy,recession,exit markets,massive fund sizes,manager selection,tax law changes,Where Does The Money Flow?,Source PEI:1600 active LPs worldwide,Institutiontype and geographicalsplit of investors in privateequity funds,Sector Allocations:
37、Who Gets Most?,Source PEI:1600 active LPs worldwide,Top 50US pension fundscurrent averageallocation breakdownby fund type.,Regional Allocations:PE Stays Close to Home,Source PEI:1600 active LPs worldwide,Global plusNorth America,Europe,Asia/Pacificbased LPs averagegeographical split ofInvestments,So
38、urce:Probitas Partners,Source:Probitas Partners,Source:Probitas Partners,EMPEAs 2007 fundraising statistics show that private equity funds investing in emerging markets raised US$59 billion in fresh capital in 2007,a 78%increase over the US$33 billion raised in 2006.Fund sizes broke records,with 19
39、funds raising US$1 billion or more.The average size of closed funds grew dramatically,from US$272 million in 2006 to US$426 million in 2007.,Source:Emerging Markets Private Equity Association,Source:Emerging Markets Private Equity Association,Source:Emerging Markets Private Equity Association,2007 R
40、EVIEW&2008 OUTLOOK USAChanges in Capital Commitments,Source:Dow Jones Private Equity Analyst,Lessons Learned:Tips&Tricks,The Marketing Push,New LP Relationships are the Hardest to Cement Start Pre-Marketing Two Years Ahead of Fundraising Be Prepared for the Long Journey!Assemble All Documents Before
41、 Fundraising Document Everything,Especially Track Record Get Local Anchor Investors in First Think of Every Question Ahead of Time Designate One Senior Partner As Point Person Brief Your References,Keep Them Informed Use Professional Advisors Use Technology Video OK But Face to Face Better,The Marke
42、ting Push,Determine Priorities:Close To Home LPs First Leverage Your Secret Sauce:Why Are You Unique?Spoon Feed LPs What They Need No Big Push Use of Virtual Data Room Learn From Each Presentation:Adopt and Adapt Do Not Push LPs for Early Decisions(Court a Negative)Deal Attribution Critically Import
43、ant Track Record Is 90%of the Game Present it Well!Answer Each LP Question Carefully Must Involve Most Senior Team Members Must Have“Market Terms”(For Your Fund-Type),The Marketing Push,Keep in Front of LPs Send Stuff Regularly Must be a Good“Fit”with LP Strategy and Timing Talk About the Mistakes a
44、nd Lessons Learned Show Succession Plan is in Place Think Long Term-Ten Year Marriage Be Anecdotal,Personal Relationships Matter Two Way Conversation Learn to Listen and Question Lighten the Atmosphere Be Relaxed Send Thank You Notes for Meeting and Advice Get used to it-Fundraising is a Life Style!
45、,Conclusion:What it Takes?,Takes Time 12-18 months to raise new funds Takes Skill It is an art,not a science Takes Luck External events impact success Takes Money$1 million per launch Takes a Team Cohesive,hungry,smart,dedicated Takes a Story who,what,how,when,where,why Takes Persistence Must turn over many rocks!,Happy Ending:Thunderbird Private Equity Partners Closes Fund at$600 million20%Over-Subscribed!,Thank You!,
